Last week, we hosted a webinar discussing the emergency cannabis regulations released by the California state agencies in charge of administering the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). We had over 1,000 people sign up to find out what the California cannabis regulatory landscape will look like next year for cultivators, manufacturers, distributors, and retailers. It was a lot of fun!
During the webinar, we took questions from attendees, but we couldn’t get to all of them due to the sheer number of questions asked (and please keep them coming!). My colleague in our San Francisco office, Alison Malsbury, recently covered the webinar questions related to cannabis manufacturers, and in this post I’ll address the most-asked questions regarding cultivation. Without further ado, here’s the Q & A:
Q: Do you need to have a separate license if you want to have a nursery?
A: It depends. A nursery is a cultivation license type that authorizes a licensee to produce clones, immature plants, seeds, and other agricultural products for the reproduction and cultivation of cannabis. So long as you have a cultivation license from the California Department of Food and Agriculture (CDFA) you won’t need a separate nursery license for your own in-house cannabis reproduction requirements. Though you will need a nursery license if you want to distribute immature plants or seeds to another licensee.
Q: Is there a cap on the number of cultivation licenses you can hold?
A: There are currently fourteen different license types that fall under the CDFA’s jurisdiction (three more will be added in 2023). Twelve of the license types are distinguished by cultivation method (outdoor, indoor, and mixed-light) and canopy size (the designated area on the premises that contains mature cannabis plants). The other two license types are for nurseries and processors (discussed below). You can hold any number of these licenses except for the medium size a/k/a Type 3 cultivation license type (between 10,0001-22,000 square feet indoor or mixed light, and up to one acre for outdoor). For now, you (or your company) can only hold one Type 3 cultivation license at a time.
Q: Is there a statewide plant canopy cap?
A: The short answer is no, and we covered this question in greater detail here. This was by far one of the more controversial omissions to come out of the CDFA’s regulations. I call it an omission because when the CDFA released their medical regulations under the MCRSA (now withdrawn) back in April they placed a four-acre statewide cap on plant canopy for cultivators, which is now gone under MAUCRSA. Further upsetting the small-scale California cannabis farmer is the fact that in its Environmental Impact Report (released in November), the CDFA recommended a one-acre canopy cap. What motivated the CDFA to remove the acreage cap is anyone’s guess (although you can likely chalk it up to private interest lobbying of the CDFA).
Q: Will all cannabis cultivated before 1/1/2018 that enters the new market have to be tested?
A: Eventually all harvested cannabis that enters the commercial market will have to be tested but the Bureau of Cannabis Control (BCC) issued temporary rules to enable an orderly transition into the regulated commercial market for existing products, including flower. Until July 1, 2018, cannabis goods held by a licensee that were cultivated or manufactured prior to January 1, 2018 but that have not been tested may be transported and sold (with certain exceptions for manufactured cannabis goods). However, you’ll still have to affix a label to the cannabis product stating that it has not been tested and that includes the requisite government warnings.
Q: Can a cultivator transport their cannabis product to a manufacturer?
A: No. All transfer of cannabis from a licensed cultivation site must be conducted by a distributor licensed by the BCC. It’s important to note that a person or company can hold a cultivation and distribution license and they can do so on the same property so long each license type has its own separate and distinct contiguous premises on the property.
Q: Can you act as a processor if you have a cultivation license?
A: Yes. A processor is a license type that only allows for trimming, drying, curing, grading, packaging, or labeling of cannabis and non-manufactured cannabis products (i.e.,flower, shake, kief, leaf, and pre-rolls). If you hold a cultivation license (specialty cottage, specialty, small, or medium), you can process cannabis on your premises without having to obtain a separate processor license so long as you: 1) designate your processing area in your cultivation plan; and 2) you’re compliant with all packaging and labeling requirements. Notably, you cannot cultivate in the processing area and a stand alone processor cannot cultivate any cannabis.